We are NOT in the business of picking bottoms. You know what they say about trying to catch the proverbial “falling knife”. But this morning’s recovery above Mon’s 99.975 initial counter-trend high confirms a bullish divergence in short-term momentum that defines Mon’s 91.0754 low as one of developing importance and a short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.
This admittedly short-term momentum raises the relevance of some critical ancillary evidence of a bottom that could be major in scope, including:
- an arguably complete 5-wave Elliott sequence down from 16 Dec19’s 128.55 high (although a confirmed bullish divergence in momentum above 11-Mar’s 106.85 corrective high and key risk parameter is required to confirm this count)
- the Fibonacci fact that the suspected 5th-Wave down from 11-Mar’s 106.85 is exactly 61.8% of the length (i.e. 0.618 progression) of the preceding net Waves-1-thru-3 from 128.55 to 102.75
- historically bearish sentiment level and
- the market’s current proximity to the extreme lower recesses of its historical 11-YEAR range shown in the monthly log chart below.
Of course, we cannot conclude a broader reversal from proof of just smaller-degree strength. But if there’s a time and place and at least some technical facts and observations for this market to reverse course, we believe that it is here and now. And,quite simply, it will take a relapse below Mon’s 91.05 new short-term risk parameter to negate this call. Until and unless such weakness is proven, we believe a new cautious bullish policy and exposure from at-the-market (100.85) levels OB are appropriate with a failure below 91.05 required to negate this call and warrant its immediate cover.